IP Dream: Li Ziqi's business Miracle and legal risk

Stop more than three years, once back, is still the top stream. With her return, the equity dispute between Li Ziqi and micro read three years ago was once again recalled. When a red-hot IP was realized, why did it suddenly die down?

The cooperation between Li Ziqi and MCN (Internet celebrity economic agency) Weinig started in 2016. Li Ziqi was responsible for producing short video content with strong personal style and cultural connotation, while Weinig was responsible for bringing these content to a wider audience with its professional ability in marketing and promotion. Together, the two sides created several hit videos. Plum 7 gradually became the head of the Internet celebrity.

In 2017, the two parties upgraded the cooperation model and jointly invested 1 million yuan to establish Sichuan Ziqi Culture Communication Co., LTD. (hereinafter referred to as "Company A"), of which Li Ziqi held 49% and Weiniang held 51%.

In the early days of the cooperation, this model achieved remarkable results, as the influence of Li Qi's videos continued to expand, and Wei Nian also gained commercial success with the popularity of Li Qi, whose products such as Luosifen powder and lotus root powder under the brand name became popular in the market.

However, behind this glory, there are also many legal risks. Li Ziqi's silence also began more than three years ago with a dispute with micro thoughts.

Li Ziqi IP risk point

(1) Brand value and intellectual property risks

1. Brand development and trademark registration

With the explosion of plum, the brand has expanded around its IP, and consumer products such as snail lion powder and lotus root powder have come out. Micro read in the name of "Hangzhou Micro read Company" registered a number of "Li Qi" and "Ziqi" trademarks, covering a number of industries.

2. Vagueness of operation attribution and capital operation

Wei Nian and Li Qi jointly built the "Li Qi" brand, but the operating ownership of "Li Qi" IP is not clear. Weinig licenses the "Li Ziqi" brand to Hangzhou Weinig Company (hereinafter referred to as "Company B") at a symbolic price of 1 yuan, and Company B then carries out brand operation.

Li Qi's Tmall flagship store, Li Qi's overseas social media accounts and other important cash channels are registered by Company B in the name of the company after signing the contract, and are not directly related to Li Qi himself.

3. Unbalanced distribution of benefits and passive situation

This means that although Li Zi7 owns 49% of the brand, it can only receive 0.49 yuan per year, while Weinig enjoys the huge profits of "Li Zi7" brand exclusively through company B, which is undoubtedly a well-designed "capital game".

4. Intellectual property risk and brand dilemma

From the dispute over the ownership of trademark rights, it can be clearly seen that Li Ziqi ignored the ownership of the trademark, an important intellectual property right, in her cooperation with Weiniang, resulting in a passive situation after the development of her brand. The trademark was registered by the partner, which made her lose the core control of the brand she worked hard to build, and the brand value was controlled and exploited by others, which seriously damaged her personal interests and the long-term development of the brand, and fully reflected the great threat of intellectual property risks to IP.

(2) Risk of equity issues

1. Equity ratio and imbalance

When Li Ziqi established Sichuan Ziqi Culture Communication Co., LTD., Li Ziqi held 49% and Weinian held 51%. The difference between 49% and 51% equity ratio seems small, but it has produced a serious imbalance in actual decision-making and profit distribution. With a majority stake, Weinim controlled the company's operations and profit distribution power, while Li Ziqi was marginalized and unable to effectively protect his rights and interests and control the brand.

2. Lack of ownership structure and right to speak

From the perspective of equity structure, Li Qi holds shares in Sichuan Ziqi (Company A), company A is responsible for releasing short videos, and Li Qi's account does not receive advertisements, so Company A is a company that only spends money and does not make money. The business of selling food to make money, such as food factories, Tmall stores, etc., are under the name of company B, and Li Ziqi's shareholding in this company is 0. This shareholding structure gives Li Ziqi no say in the business that makes money, which may result in her not being able to control the business operations of Li Ziqi IP.

3. Intensification and cessation of contradiction

According to the original division of labor, micro thoughts for the commercial layout of Li Ziqi IP, Ziqi culture is responsible for content creation. What began as a mutually beneficial relationship developed into a conflict of interest. In fact, the intensification of the above risks is also an important reason for plum seven to stop. On July 14, 2021, Li Ziqi stopped after Posting his last video. During the period, the contradiction between the two sides escalated, on October 25, 2021, a lawsuit made the contradiction between Li Ziqi and Hangzhou Micro public: the two sides disagreed on the ownership and income distribution of the IP of "Li Ziqi". Subsequently, in November 2021 and January and March 2022, the two parties sued each other several times, and the cases were heard in Mianyang Intermediate People's Court and Fucheng District People's Court several times.

4. Reconciliation and return of control

Until December 27, 2022, "Micro read and Li Qi reached a settlement by the court mediation" news came, Li Qi and MCN organization micro read dispute finally came to an end.

After the end of this public struggle, Li Qi also took back the company control of Ziqi Culture. In December of the same year, the industrial and commercial changes occurred in Sichuan Ziqi Culture Communication Co., LTD., and Liu Tongming, the founder of Weinim, withdrew from the company, and the shareholding ratio of Hangzhou Weinim Brand Management Co., Ltd. was reduced from 51% to 1%, and the shareholding ratio of Li Ziqi (Li Jiajia) was increased from 49% to 99%. Soon after, Hangzhou Micro Brand Management Co., Ltd. withdrew from the shareholders.

Case warning: This case sounds the alarm for other creators, warning that when cooperating with capital, they must carefully design the ownership structure to ensure that they have enough voice and decision-making power in brand development.

(3) Contract signing and termination risks

1. Risk of insufficient operation qualification

In the contract stage between the creators and MCN, Li Ziqi may also face many risks. On the one hand, if MCN company's operating qualification is insufficient, there may be various problems in the subsequent development, affecting the creation and development of Liziqi IP. For example, there are not enough resources to provide support, and there are loopholes in legal compliance.

2. Risk of "Overlord clause"

On the other hand, the "overlord clause" is also a potential risk. MCN may set some unreasonable terms in the contract to limit the development and rights of Li Ziqi. For example, the contract may stipulate exorbitant liquidated damages, and Ms. Li could face huge compensation if she commits some minor breach. The "Overking Clause" may also include exclusionary clauses restricting Lizi's cooperation with other institutions, unreasonable income distribution ratio, and excessively long contract term. These terms may constrain Li's career development, leaving her in a passive position in cooperation and unable to fully develop her creativity and business value.

3. Account ownership risk

In addition, account ownership risk is also an important issue. If the contract does not specify the ownership of the account, in the event of a conflict between the two parties, the control of the account may become the focus of dispute. This could lead to the MCN company taking control of Li's hard-worked account, thus losing an important channel to communicate with fans.

The impact of a risk outbreak

1. The impact of equity disputes on brand image

The long dispute and litigation process between Li Qi and Weinian had a negative impact on Li Qi's brand image. During the stoppage, fans' expectations were disappointed, the brand's heat and attention declined, and there were various speculations and doubts in the market. In addition, the open conflict with the partner has also made some potential business partners wait and see, affecting the business expansion and value enhancement of the brand.

The dispute between Li Ziqi and Weinian reflects that there may be unclear and imperfect terms in the cooperation contract between the two parties. For example, the agreement on key terms such as brand use, licensing, and revenue distribution was not clear enough, resulting in ambiguity and disputes in the cooperation process, which eventually led to a series of legal proceedings.

2. Differences in creative ideas lead to disagreements

From the above interview clips, it can be seen that Li Ziqi and Wei Nian are also very different in their creative ideas. Li Ziqi pays attention to the deep cultivation and inheritance of traditional culture, hopes to maintain independence and autonomy in content creation, and carefully crafted each work, and has his own ideas and insistence on the rhythm and mode of commercial realization. As a commercial company, Weinim is more inclined to maximize its commercial value as soon as possible with the help of Li Ziqi's traffic, pursue short-term economic benefits, and be more radical in brand expansion and business cooperation. This difference in creative philosophy and business goals has led to serious differences between the two sides on the path of brand development.

3. Risk summary and enlightenment

In IP creation and business cooperation, disputes between partners may bring serious risks of damage to brand image and business value, and creators need to pay attention to the protection and maintenance of brand image while safeguarding their own rights and interests. At the same time, the contract risk can not be ignored, creators need to have a strong legal awareness, carefully review the terms before signing the contract, to ensure that their rights and interests are fully protected, to avoid unnecessary legal disputes due to contract loopholes.